The National Labor Relations Board has established a new standard for evaluating and scrutinizing employer workplace rules that is likely to cause headaches for anyone responsible for drafting such policies.

In the board’s Stericycle, Inc., 372 NLRB No. 113 (2023) decision, yet another Trump-era decision has fallen.

The Board majority stated that a work rule would be deemed presumptively unlawful if it “has a reasonable tendency to chill employees from exercising their Section 7 rights.” In describing this vague test, the Board noted that its analysis will be undertaken from the perspective of “the reasonable employee who is economically dependent on her employer and thus inclined to interpret an ambiguous rule to prohibit protected activity she would otherwise engage in.” From the start, the Stericycle test will set well-meaning employers on their back foot based on the whims and personalized interpretations of its employees.

Prior to its August 2, 2023 about-face, the Board’s standard for determining the lawfulness of employer work rules was straightforward. As described in The Boeing Company, 365 NLRB No. 154 (2017) and later clarified in LA Specialty Produce, 368 NLRB No. 93 (2019), the Board categorized employer work rules in three ways:

• Category 1 rules were designated as lawful if the rule would be reasonably interpreted as not interfering with employees’ rights under the Act or the potential impact on those rights were outweighed by legitimate employer justifications for the rule.
• Category 2 rules warranted individualized scrutiny on a case-by-case basis to determine whether they had an adverse impact on employees’ protected rights.
• Category 3 rules were those that prohibited or limited employees’ protected rights and could not be otherwise justified.

Under this former test, the Board would review the rule from the perspective of an “objectively reasonable employee.” For half a decade, the Boeing standard reasonably balanced employee and employer interests, and provided clear guidance for complying with the National Labor Relations Act. The Stericycle decision moves the goal posts on employers in a manner that will cause uncertainty in its application.

Further, the Board added that the employer may only rebut the presumption of unlawfulness by proving that “the rule advances a legitimate and substantial business interest, and that the employer is unable to advance that interest with a more narrowly tailored rule.” In light of the NLRB’s contention that the Boeing framework was “regularly applied to designate all rules of a generalized type as always lawful to maintain,” the Board majority appears intent to villainize any work rule regarding employee conduct, behavior and expectations as unlawful. In one final shot, the Board majority also determined that its new standard should apply retroactively.

In his dissenting opinion, Board Member Marvin Kaplan articulated the likely issues that Stericycle will cause. He noted that, despite the Supreme Court requiring the NLRB to “work[] out an adjustment between the undisputed right of self-organization assured to employees… and the equally undisputed right of employers to maintain discipline in their establishments,” the Board majority has essentially given “one-sided emphasis to Section 7 rights” that “directly conflicts with longstanding Board precedent.” In essence, the Board majority “inherently privileges employees rights while placing scant, if any, weight on employer interests.”

The Board’s decision has major ramifications for employers of union and non-union workforces. Should the Board find an employer’s work rule not to be narrowly tailored — regardless of the employer’s intentions — it could result in wide-ranging remedies including recension of the rule, and removing discipline and make-whole remedies for employees. Accordingly, employers should seek out experienced legal counsel to help them determine their rights under the National Labor Relations Act and to review their work rules and policies for compliance.

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